You are asked to watch over your brother and sister in exchange for a fee.You invited your friends over and you watched TV all night without paying attention to your siblings.What type of agency problem is this?

Question

Quizplus · Accepted Answer

This is an example of moral hazard, as the individual being paid to watch over their siblings has no incentive to actually fulfill their duty and ensure their safety as they are being paid regardless of their actions.

You Are Asked to Watch Over Your Brother and Sister